City leaders said that would prevent the city from filing bankruptcy, but according to a former city manager, the vote could ultimately lead to bankruptcy.

Several dozen people showed up to the Stockton City Council meeting.

Dozens spoke in opposition to the idea.

"Your seats are in jeopardy," said one Stockton resident.

"We are listening, and we will vote accordingly," said one Stockton resident.

"If they vote for mediation, it is the first step toward bankruptcy. That means 1,000 people could lose retirement benefits," former City Manager Dwane Milnes said.

Kevin Huff worked for the city of Stockton for 34 years. He said he was asked to retire early in exchange for medical benefits during his retirement.

"They offered me a golden handshake to retire. Now I want my job back, because I could lose my retirement benefits," Huff said.

He is one of about 1,000 people who could lose their benefits or see benefits reduced if the city of Stockton goes bankrupt.

Milnes said the current city manager proposed mediation because he knows it's the first step toward bankruptcy.

"It is the law to have mediation before you can claim bankruptcy," Milnes said.

Milnes said bankruptcy would be bad for the city, residents and employers.

Aside from the recession, City Manager Bob Deis blamed Stockton's problems on bad management, unsustainable retiree health insurance, and the sale of bonds resulting in large debt.

Deis described the city as being millions of dollars over its budget, and facing future costs spiraling out of control.

Many people questioned how Stockton got into this financial situation.

"Should some of those things been alerted, too?" asked Council Member Elbert Holman.

"You trust factor has pretty much evaporated," said one Stockton resident.

"You can't keep pointing fingers. At some point, the buck has to stop," another Stockton resident said.

In addition to approving a mediation process, as part of the resolution, the city was also asked to approve several other moves as part of the resolution -- including a continuation of the city's fiscal emergency, several spending cuts and the suspension of pay-outs for unused sick and vacation time for retiring employees.